October 10, 2003
The Honorable William Thomas
Chairman
Committee on Ways and Means
United States House of Representatives
1102 Longworth House Office Building
Washington, DC 20515
Dear Chairman Thomas:
By taxing income earned in other nations and imposing high tax rates, the current United States tax system violates important principles of good tax policy. These anti-growth features undermine the economy’s performance and hinder the ability of American firms to compete in the global economy. More specifically, the tax code unduly raises the cost of capital for U.S. firms trying to invest, taxes profits at a rate far higher than do our trading partners, and is littered with complex rules that often result in double taxation of foreign income while many countries do not tax active foreign income at all.
We are writing to commend you for seeking to reform the tax treatment of international business income. Your proposed legislation, H.R. 2896, the “American Jobs Creation Act of 2003,” takes important, fundamental steps towards a territorial, consumption-based tax system. This will improve the competitiveness of the U.S. tax code and help create a level playing field for U.S.-based companies. These changes will allow U.S. firms to expand both domestically and internationally and will increase U.S. employment.
In addition, we would like to recognize important provisions in your bill that lower the cost of capital, encourage investment, and make another step forward towards a neutral, progrowth tax code. Specifically, reducing the depreciation lives for equipment is a commendable step forward in the quest for a consumption-based tax system that allows investment to be immediately expensed.
Although we are disappointed that the World Trade Organization (WTO) and the European Union are attempting to dictate U.S. tax law, we believe that enacting H.R. 2896 will result in a tax code that better promotes U.S. business both within the U.S. and abroad. Such changes will result in greater productivity, output, and employment.
Sincerely,
Glenn Hubbard
Columbia University
Kevin Hassett
American Enterprise Institute
Daniel Mitchell
The Heritage Foundation
Veronique de Rugy
Cato Institute
Richard Rahn
Discovery Institute
Charles Calomiris
Columbia University
Richard Vedder
Ohio University
Deepak Lal
University of California, Los Angeles
Anna J. Schwartz
National Bureau of Economic Research
Ryan C. Amacher
University of Texas at Arlington
Charles W. Baird
California State University
Don Booth
Chapman University
Thomas E. Borcherding
Claremont Graduate University
Charles H. Breeden
Marquette University
Wayne Brough
Citizens for a Sound Economy
Boyd Collier
Tarleton State University
Nicholas Eberstadt
American Enterprise Institute
Kenneth G. Elzinga
University of Virginia
Eric Engen
American Enterprise Institute
Stephen J. Entin
Institute for Research on the Economics of Taxation
Edward W. Erickson
North Carolina State University
Frank Falero
University of California, Bakersfield
Peter Ferrara
International Center for Law and Economics
Fred Foldvary
Santa Clara University
Micah Frankel
California State University
David E.R. Gay
University of Arkansas
Paul Y. Hammond
University of Pittsburgh
Robert Haywood
World Economic Processing Zone Association
Randall Holcombe
Florida State University
Matt Kibbe
Citizens for a Sound Economy
Robert Krol
California State University, Northridge
Edward J. López
University of North Texas
Yuri N. Maltsev
Carthage College
Michael L. Marlow
Cal Poly, San Luis Obispo
Roger E. Meiners
University of Texas-Arlington
Harry Messenheimer
Rio Grande Foundation
Mark J. Perry
University of Michigan-Flint
William H. Peterson
The Heritage Foundation
Barry Poulson
University of Colorado at Boulder
Jan Prybyla
The Pennsylvania State University (Emeritus)
Don Racheter
Public Interest Institute
George Reisman
Pepperdine University
Tim Roth
University of Texas at El Paso
James Roumasset
University of Hawaii
Paul H. Rubin
Emory University
S. Fred Singer
University of Virginia (Emeritus)
Richard H. Timberlake, Jr.
University of Georgia, retired
John T. Warner
Clemson University
Gary Wolfram
Hillsdale College
